What Should an Employment Agreement for Physicians Include?

Whether you work in family medicine, cardiology, anesthesiology, or any other medical specialty, you’ll need to sign an employment agreement at some point in your career.

Employment agreements are legally binding contracts. Before you sign one, make sure that you understand all the terms, clauses, and stipulations spelled out in the contract.

No matter what type of medical care you provide, here’s what every physician employment agreement should include. As well as an explanation of why you need a contract review to make sure you’re signing a fair deal.

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What Is an Employment Agreement?

Employment contracts are binding agreements between an employer and employee.

They apply to all types of physicians in all employment settings, including:

• New employees
• Full-time employees
• Part-time employees
• Independent contractors
• Locum tenens physicians

Whether you work as a partner in a privately owned practice or for a large hospital network, the agreement defines the employment relationship.

For the employer, they provide protection by stating how much they’ll pay. This also involves spelling out the duties of the physician, and sometimes building in restrictive covenants for added leverage. For the physician, they offer protection by making it clear what your responsibilities are, how many hours you’re required to work, and how much you’ll make.

Consequently, written contracts can be dense. There are various things they must include. Such as a range of items that they may or may not have. This depends on the position and the employer hiring you to do the job.

See also: Physician Contracts: Independent Contractor or Employee?

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The Most Common Elements of an Employment Agreement

Employment agreements include a wide range of items that cover all the terms of employment.

Here are the most common elements that appear on every physician employment contract:

• Start and end dates of the contract
• Number of hours they’ll expect you to work
• The type of medicine you practice
• On-call hours and on-call schedule, if applicable
• Patient care duties
• Administrative duties
• Salary and other compensation
• Compensation model
• Benefits
• Termination clauses
• Restrictive covenants

The Time Period in Which You’ll Work

Along with the start and end dates of your contract, your employment agreement will include:

• Amount of time they expect you to put in each week,
• Length of time (in shifts), or the days that you’ll be required to be on call
• Whether or not you are signing on for full-time or part-time work

You should negotiate all these details before your employer drafts your contract. Your agreement should serve as a recap of all the details you’ve already discussed.

Your Daily Duties

Accordingly, employment contracts specify the job you’re signing on for. Which means the type of medicine you’ll practice and the duties required of you. This includes everything from seeing patients to providing follow-up care and being responsible for specific administrative tasks.

Compensation and Compensation Model in your Employment Agreement

Therefore, your written employment contract will detail your total pay. It needs to include your base salary plus any sign-on bonuses, incentive bonuses, or available productivity bonuses. In addition, it will also explain your compensation model.

There are several compensation models under which physicians may earn salaries.

Here is a snapshot of the most popular models used today:

Straight Salary Compensation with a Minimum Salary Guarantee

Moreover, under this model, physicians receive a pre-negotiated salary with a minimum salary guarantee. This is one of the most common payment models. In addition, it is the one that most new, young physicians can expect to see on their employment agreements.

Salary Plus Bonuses and/or Incentives

This is similar to the straight salary compensation model. However, it allows physicians to collect bonuses and incentives. These bonuses are usually based on productivity and wRVUs.

Equality or Equal Shares Compensation

The equal shares compensation model is less common. It doesn’t provide any guarantee of salary. Under the equality or equal shares compensation model, physicians working in a specific practice earn a percentage of the practice’s profits. Regardless of how small or large those profits may be.

However, this can be problematic, as it’s unlikely that all physicians in a practice will have the same productivity levels.

Productivity-Based Compensation

Some employers pay physicians strictly based on their productivity levels.

Under this model, physicians receive pay based on their billings and collections. This can decrease earnings for physicians in a new practice that are still building a patient base.

Employment Agreement: Employee Benefits

Besides salary and wages, employment agreements include a comprehensive list of all other benefits you will receive, when you are eligible and if you complete a probationary period before collecting them.

These benefits include:

• PTO and vacation pay
• Health insurance
• Liability insurance
• Disability insurance
• Life insurance
• Malpractice tail insurance
• CME reimbursement
• 401k or other retirement plan options

Also, pay special attention to your benefits regarding malpractice tail insurance. If your employer does not provide you with tail insurance, you will be responsible for the cost of it yourself. You need that tail insurance to protect against possible claims made after your employment contract ends.

Termination Clauses

No one wants to think about termination before they even start a new job, but nonetheless, all contracts include clauses related to the end of employment.

This section of your agreement may indicate the period in which you have to give notice and whether or not they can let you go without cause.

A “with cause” termination clause means that the employer needs a specific reason to terminate your employment. A “without cause” clause means they can remove you for any reason or no reason at all. A “with cause” policy protects your interests and salary, whereas a “without cause” policy does not.

Restrictive Covenants

Therefore, it’s common for employment agreements to include restrictive covenants, including non-solicitation and non-compete agreements.

Non-competition agreements may prevent you from working within a certain radius of your employer for a certain amount of time after your contract ends or terminates.

Non-solicitation clauses prevent you from taking clients or other employees with you to your next job.

Read The Non-Compete Clause: What is It? Is it Enforceable? to learn more about non-compete clauses and how they can affect your career.

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Other Terms Your Employment Agreement may Include

While all contracts should include all the details discussed above, some employment agreements include additional information.

Before you sign an employment agreement, be sure that you understand each of these terms:

Return of Records Clause

When there’s a return of records clause in your contract, your employer owns all of your patients’ medical records. This is common but can be problematic. For example, when you leave your employer for a new one or start your own practice.

The return of records clause prevents you from taking any medical records with you when you leave. If a patient follows you to your new practice, they’ll have to submit a formal medical records request to access their history as your patient.

Indemnification Clause

If you see an indemnification clause in your contract, pay attention. They are only fair if they work in two directions.

Under an indemnification clause, one party assumes responsibility for losses caused by another party. If a hospital employs you, they may include this clause so that the hospital itself is not responsible for damages caused by the physician. This is normal.

Moreover, just make sure that the clause works in reverse as well. In addition, as the physician, make sure you aren’t held liable for damages caused by the hospital.

Intellectual Property Clause

Thinking of spending your downtime writing a book about your medical experience? How about developing a podcast or a blog to educate other physicians?

If your employer includes an intellectual property clause in your contract, they may own the rights to that creative endeavor, even if you do it on your own time.

Even if the intellectual property you create doesn’t tie directly to your employment, your employer may have a claim to it (and to any revenue generated from it) while you’re under contract with them.

Confidentiality Agreement

There’s not an employer on earth who wants their current or former employees giving away their secrets. For this reason, it’s common for employment contracts to include confidentiality agreements that restrict you from sharing confidential information with anyone other than your employer.

Confidentiality clauses are similar to non-disclosure agreements, but they are more general in nature. NDAs tend to refer to a specific incident, event, or person, while confidentiality agreements are all-encompassing.

Relocation Expenses

Moreover, if your employer has agreed to help you relocate before starting a new position, you should detail those moving expenses in your employment agreement. According to a 2020 report from the medical recruiting firm Merritt Hawkins, physicians offered a relocation bonus received an average of $10,533.

Any time your employer offers a benefit outside of your base salary, it needs to be in your contract.

Ownership/Partnership Buy-In Options

Some physicians seek a new position with one goal: to eventually become a partner or an owner in the practice.

When ownership or partnership is an option, the company policies regarding how it will work and how much it will cost you should be in your contract.

Buy-in options are usually only available after a physician has worked in the practice for a long time, such as three or five years.

Therefore, if a partnership is your goal, make sure your employer doesn’t omit this clause from your employment agreement.

See also: Do Contract Reviews Work?

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Hire a Contract Review Specialist Before You Sign an Employment Agreement

A contract of employment is a legally binding document, and you should never sign one without seeking legal advice first. For businesses, the terms of the agreement are usually crafted in a way that benefits the business/employer, not the employee or contractor.

However, contract review experts know what terms are acceptable. They know which clauses and restrictive covenants are legal in your specific geographic area. In addition, they can identify crucial clauses that might be missing. Contract experts can even help you negotiate for better pay, more perks, or better benefits based on your needs.

Without a professional contract review specialist to read through all the terms, you could find yourself in a compromising position where you’re not getting the pay or benefits you deserve.

From the type of healthcare you’ll receive to the possibility of collecting severance pay, your employment contract should include every detail relevant to the job’s duties. A contract review specialist will make sure that your agreement consists of all the necessary information. They can provide you with the employment protection you need as well.

Discover: Five Common Misconceptions about Physician Contract Reviews

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Conclusion

Ready to sign a new employment contract or renew an existing one?

Contact Physician’s Thrive now to find a contract review specialist that will have your best interests in mind.

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